FedEx Corporation (



F2Q2011 Earnings Call Transcript

December 16, 2010 8:00 am ET


Mickey Foster – IR

Fred Smith – Chairman, President and CEO

Alan Graf – EVP, CFO

David Bronczek – President and CEO, FedEx Express

Mike Glenn – EVP, Market Development and Corporate Communications

David Rebholz – President and CEO, FedEx Ground

Bill Logue – President and CEO, FedEx Freight

Christine Richards – EVP, General Counsel and Secretary


Thomas Wadewitz – JPMorgan

Gary Chase – Barclays Capital

Ken Hoexter – Bank of America Merrill Lynch

John Barnes – RBC Capital Markets

Justin Yagerman – Deutsche Bank

Matthew Brooklier – Piper Jaffray

Donald Broughton – Avondale Partners

David Ross – Stifel Nicolaus

Jason Seidl – Dahlman Rose

Jeff Kauffman – Sterne Agee

Chris Ceraso – Credit Suisse

Bill Greene – Morgan Stanley

Scott Malat – Goldman Sachs

Ed Wolfe – Wolfe Trahan

Jon Langenfeld – Robert W. Baird



Good day, everyone, and welcome to the FedEx Corporation second quarter earnings conference call. Today's call is being recorded.

At this time, I would like to turn the call over to Mickey Foster, Vice President of Investor Relations for FedEx Corporation. Please go ahead, sir.

Mickey Foster

Compare to:
Previous Statements by FDX
» FedEx CEO Discusses F1Q2011 Results - Earnings Call Transcript
» FedEx Corporation F4Q10 (Qtr End 05/31/10) Earnings Call Transcript
» FedEx Corporation F3Q10 (Qtr End 02/28/20) Earnings Call Transcript
» FedEx F2Q10 (Qtr End 11/30/09) Earnings Call Transcript

Good morning and welcome to FedEx Corporation's second quarter earnings conference call. The second quarter earnings release and our 25-page statistical supplement book are on the website at This call is being broadcast from our website and the replay and podcast download will be available for about one year.

Joining us on the call today are members of the media. During our question-and-answer session, callers will be limited to one question and a follow-up, so we can accommodate all those who would like to participate.

I want to remind all listeners that FedEx Corporation desires to take advantage of the Safe Harbor provisions of the Private Securities Litigation Reform Act. Certain statements in this conference call maybe considered forward-looking statements within the meaning of the Act. Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information on these factors, please refer to our press releases and filings with the SEC.

In our earnings release, we include certain non-GAAP financial measures, which we may discuss on this call. Please refer to the release available on our website for further discussion of these measures and a reconciliation of them to the most directly comparable GAAP measures.

To the extent we disclose any other non-GAAP financial measures on this call, please refer to the Investor Relations portion of our website at for a reconciliation of such measures to the most directly comparable GAAP measures.

Joining us on the call today are Fred Smith, Chairman, President and CEO; Alan Graf, Executive Vice President and CFO; Mike Glenn, President and CEO of FedEx Services; Chris Richards, Executive Vice President, General Counsel and Secretary; Rob Carter, Executive Vice President, FedEx Information Services and CIO; Dave Bronczek, President and CEO of FedEx Express; Dave Rebholz, President and CEO of FedEx Ground; and Bill Logue, President and CEO of FedEx Freight.

Now our Chairman, Fred Smith, will share his views on the quarter, followed by Alan Graf. After Alan, we will have Q&A.

Fred Smith

Thank you, Mickey. Good morning, ladies and gentlemen. Happy holidays and welcome to our conference call to discuss earnings for the second quarter of fiscal '11 and our outlook.

Strong demand for FedEx Transportation, outstanding customer service from our team of 300,000 plus around the world, and a healthier global economy combined to drive revenue higher.

As we reminded many of you at our Investors and Lenders Meeting in September, we are relentlessly focused on improving our yields. Our strategy is fast gaining traction. Yields and volumes increased significantly year-over-year in our Transportation segments during the second quarter.

On Monday, FedEx recorded its busiest day in company history in terms of total shipments carried. More than half of this year's peak volume increase is expected to result from online retail and catalog shipments delivered to residential customers through our FedEx SmartPost network, which also delivered a 10% yield improvement for the quarter.

We're now more bullish about the remainder of the year based on our record-setting peak volumes and greater anticipated customer demand for our services. We also are increasingly upbeat about longer term more positive macroeconomic trends. As a result, today we are increasing our earnings per share guidance for the fiscal year. We believe FedEx will continue to prosper as we execute our strategy of revenue and yield improvement and as customers increasingly appreciate our unparalleled service portfolio of global business solutions.

Overall, the global economic picture is increasingly more positive as recovery continues at a steady pace. We're encouraged also by the recent bipartisan cooperation in Washington on taxes. We believe the actions being considered, particularly the expensing provisions, will lead businesses to increase capital expenditures, thereby creating jobs and increasing economic activity and GDP. Also, FedEx is very pleased with Tuesday's significant rulings from the federal District Court in Indiana, favoring FedEx Ground related to its independent contractor business model.

We believe consumer and business sentiments are improving. Forward-looking indicators such as purchasing and credit manager surveys and other leading economic indexes collectively point to continued growth. While Asia is moderating toward more normal high growth rates, it is still the world's economic engine. Latin America as a whole is doing very well and European GDP growth is performing better than many expected. We expect manufacturing and industrial production will continue to lead the economy forward in the near term and drive transportation volumes higher.

Read the rest of this transcript for free on